Document discussing survival plan for the Bitcoin Foundation.

1. Strategic Proposal
March 5, 2015

2.  At the end of the year the Foundation faced some significant challenges:
 Poor reputation
 Declining membership
 Falling bitcoin prices
 Very bad balance sheet
 January 2014 close – $5.2mm
 January 2015 close – $463k
 In spite of this we have made significant progress in turning around the
financial situation with consistent month/month revenue growth and declines
in operating loss
 There is an outside chance that March could be the Foundation’s first
cash-flow positive month since the earliest days of the Foundation
 The Foundation’s reputation has been steadily improving in the business
community although some uncertainty remains due to Board elections
 However, despite improvement in the business processes and functioning of
the organization there are some remaining structural challenges that may
prove insurmountable without some fundamental changes to the organization
Current situation

3. Summary Trendline

4. Total Revenue Trend by Category
December 2014 does not include $25K in kind membership from Perkins Coie
-
20,000
40,000
60,000
80,000
100,000
120,000
Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15
Fcst
Dona ons
Speaking Engagements
Conferences
Membership

5. Membership Revenue Trend
December 2014 does not include $25K in kind membership from Perkins Coie
-
25,000
50,000
75,000
100,000
Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15
Fcst

6. Net Operating Loss Trend
December 2014 does not include $25K in kind membership or $87K credit in legal expense
from Perkins Coie negotiation
-
50,000
100,000
150,000
200,000
250,000
Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15
Fcst

7.  The organization as currently structured is better suited to a 501(c)4 promotional
organization and not an engineering team. People willing to invest the large amounts
needed to fund engineering want the ability to direct funding without the reputational
or management risk of an elected board. Large donors don’t want to commit significant
capital to an org where they must share 50% control of their funds with members who
pay as little as $25.
 The IRS has indicated that our 501(c)6 status may be in jeopardy if we are directly
funding software development and advancing a specific product (Bitcoin Core). We can
transition to a 501(c)4 without penalty if focus is purely promotion, education and
community development.
 To continue funding an engineering team within the Foundation we will need a
significant infusion of cash or potentially be insolvent in ~8 weeks. The total addressable
market for fundraising in the current configuration appears to be $500-750k or $1.25-
1.5mm short of our current minimum operating budget. Therefore, significant
restructuring is required to best align funders interests with Foundation goals and needs.
 To best position the Foundation for success and ensure adequate funding is available to
support Core Development, we recommend splitting the organization into two separate
entities:
• The Bitcoin Foundation v2.0 - 501(c)4
• New Co. for Bitcoin Core engineering team
Challenges and opportunity

8. Bitcoin Foundation, Inc. – 501(c)6
Bitcoin Foundation roles
Bitcoin Core
development
Bitcoin standards body
Bitcoin promotion
Linux Foundation approach

9. Dividing up the roles
Development NewCo
(Bitcoin Core engineering team)
Bitcoin Standards Body
Bitcoin Foundation, Inc. - 501(c)4
(Promotion & Community)
Credibility and resource sharingOutreach, promotion and
fundraising
Mozilla approach

10.  Promotional org supported by membership base
• Continue DevCore conference series with projected net income
of ~$150K in 2015
• Partner for big tent event “Bitcoin 2015” - no expense outlay
required and revenue share potential is ~$75K
• Audience agreement would remain in place providing free PR
and participation in the first major positive image branding
effort for bitcoin
• Foundation can still lead ongoing funding efforts for NewCo
through issuance of technical grants via Lighthouse and
traditional efforts
• Minimal staffing required:
• ED/Outreach Director responsible for overall org and
running DevCore
• Part-time bookkeeper
• Outsourced web/technical support
• Gavin and Patrick would remain engaged
Bitcoin Foundation v2.0

11.  New Co. for Core Development
• Form new entity focused on engineering resources for Bitcoin
Core software project
• Fundraising led by Patrick and Gavin would target to bring in at
least $2M
• NewCo will be structured to specifically meet the needs of
highest value contributors in terms of oversight of their funds,
must likely through direct board representation
• Existing technical development team would move to new org
(Gavin, Wladimir, Cory) with additional hires planned
• NewCo would continue to support DevCore and other
promotional and community efforts
• Lead Standards efforts – continue engagement with Alliances
New Co. for Core Development

12. Bitcoin Foundation v2.0
Forecast Statement of Operations
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 FY 2015
Actual Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst
Income
Conferences 18,000 5,000 30,000 95,000 15,000 - - - 75,000 75,000 75,000 - 388,000
Membership 47,261 100,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 247,261
Donations 67 100 500 500 500 500 500 500 500 500 500 500 5,167
Total Income 65,328 105,100 40,500 105,500 25,500 10,500 10,500 10,500 85,500 85,500 85,500 10,500 640,428
Expenses
Technical Development 61,045 56,808 82,040 947 2,447 2,447 2,447 2,447 1,234 - - - 211,863
Membership Development 30,368 31,697 28,771 - - - - - - - - - 90,836
Outreach - - - 47,629 50,820 14,620 14,620 16,820 58,620 14,620 60,820 14,620 293,188
Operations 226,790 52,557 56,566 17,672 15,138 8,138 7,638 7,638 7,638 7,638 7,638 7,638 422,693
Total Expenses 318,203 141,062 167,377 66,248 68,406 25,206 24,706 26,906 67,493 22,258 68,458 22,258 1,018,581
Other Income/(Expense) - - - - - - - - - - - - -
Change in Net Assets (252,875) (35,962) (126,877) 39,252 (42,906) (14,706) (14,206) (16,406) 18,007 63,242 17,042 (11,758) (378,152)
Net Loss excl. Unrealized G/L (75,141) (35,962) (126,877) 39,252 (42,906) (14,706) (14,206) (16,406) 18,007 63,242 17,042 (11,758) (200,419)
Estimated Cash Balance 150,000 189,252 146,346 131,640 117,434 101,029 119,036 182,278 199,320 187,561

13. Bitcoin Foundation v2.0
Forecast Operating Expense Detail
Salary
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 FY 2015
Actual Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Budget
72,957 73,310 63,333 20,000 9,583 9,583 9,583 9,583 9,583 9,583 9,583 9,583 306,267
Payroll Tax
Health Insurance
Vacation Expense
7,168 5,433 6,350 1,775 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 29,925
2,604 5,318 5,500 150 - - - - - - - - 13,572
5,229 4,765 4,904 1,326 625 625 625 625 625 625 625 625 21,224
Office Rent
Office Supplies
Postage & Delivery
- - - - - - - - - - - - -
25 - 100 50 50 50 50 50 50 50 50 50 575
87 14 250 - - - - - - - - - 350
Meals & Entertainment
Dues & Subscriptions
Licenses & Registrations
364 1,239 500 - - - - - - - - - 2,103
355 - - - - - - - - - - - 355
- 287 - - - - - - - - - - 287
Website Development
Expensed HW
Expensed SW
Internet
Professional Svcs - General
Professional Svcs - Accounting
Professional Svcs - Legal
Public Relations
2,233 3,000 5,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 46,233
- - - - - - - - - - - - -
796 487 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 11,283
1,856 2,024 2,100 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 28,479
30,167 21,167 33,267 - 5,000 - - - - - - - 89,600
1,800 2,500 5,000 2,000 7,500 500 500 500 500 500 500 500 22,300
400 1,000 1,000 1,000 1,000 1,000 500 500 500 500 500 500 8,400
- - - - - - - - - - - - -
Advertising & Promotion - - - - - - - - - - - - -
Travel 2,083 5,576 10,500 2,500 4,000 - - - 4,000 - 4,000 - 32,660
Bank & merchant service fees 539 300 750 500 350 350 350 350 350 350 350 350 4,889
Corporate Insurance
Development Grants
Sponsorships - General
331 - - - - - - - - - - - 331
3,480 3,443 5,823 2,447 2,447 2,447 2,447 2,447 1,234 - - - 26,217
2,000 4,200 2,000 2,000 4,200 2,000 2,000 4,200 2,000 2,000 4,200 2,000 32,800
Conference Production 2,799 7,000 20,000 25,000 25,000 - - - 40,000 - 40,000 - 159,799
Charitable Contributions 977 - - - - - - - - - - - 977
Misc.
Exchange (gain)/loss - Realized
Exchange (gain)/loss - Unrealized
Total Expenses
- - - - - - - - - - - - -
2,219 - - - - - - - - - - - 2,219
177,734 - - - - - - - - - - - 177,734
318,203 141,062 167,377 66,248 68,406 25,206 24,706 26,906 67,493 22,258 68,458 22,258 1,018,581

14. New Co. for Core Development
Forecast Statement of Operations
Income
Core Supporters
Misc. Donations
Total Income
Expenses
Technical Development
Operations
Total Expenses
Other Income/(Expense)
Change in Net Assets
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 FY 2015
Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst
2,000,000 - - - - - - - - 2,000,000
-
2,000,000 - - - - - - - - 2,000,000
76,063 128,865 111,865 111,865 110,707 110,707 110,707 110,707 110,707 982,192
59,297 51,297 51,297 54,297 54,297 54,297 53,297 53,297 52,297 483,677
135,360 180,162 163,162 166,162 165,004 165,004 164,004 164,004 163,004 1,465,868
- - - - - - - - - -
1,864,640 (180,162) (163,162) (166,162) (165,004) (165,004) (164,004) (164,004) (163,004) 534,132

15. New Co. for Core Development
Forecast Operating Expense Detail
Salary
Payroll Tax
Health Insurance
Vacation Expense
Recruiting
Office Rent
Office Supplies
Postage & Delivery
Meals & Entertainment
Licenses & Registrations
Website Development
Expensed HW
Expensed SW
Internet
Professional Svcs - General
Professional Svcs - Accounting
Professional Svcs - Legal
Communications
Travel
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 FY 2015
Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Budget
64,167 106,667 106,667 106,667 106,667 106,667 106,667 106,667 106,667 917,500
7,700 12,800 12,800 12,800 12,800 12,800 12,800 12,800 12,800 110,100
3,850 7,600 7,600 7,600 7,600 7,600 7,600 7,600 7,600 64,650
4,744 7,196 7,196 7,196 6,038 6,038 6,038 6,038 6,038 56,518
1,000 - - - - - - - - 1,000
- - - - - - - - - -
100 100 100 100 100 100 100 100 100 900
100 100 100 100 100 100 100 100 100 900
500 500 500 500 500 500 500 500 500 4,500
- - - - - - - - - -
5,000 5,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 31,000
- 10,000 - - - - - - - 10,000
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 9,000
1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 13,500
29,100 19,100 14,100 14,100 14,100 14,100 14,100 14,100 14,100 146,900
4,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
6,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 14,000
- - - 5,000 5,000 5,000 3,000 3,000 3,000 24,000
6,000 6,000 6,000 4,000 4,000 4,000 5,000 5,000 4,000 44,000
Bank & merchant service fees
Corporate Insurance
Misc.
Exchange (gain)/loss - Realized
Exchange (gain)/loss - Unrealized
Total Expenses
100 100 100 100 100 100 100 100 100 900
500 500 500 500 500 500 500 500 500 4,500
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
135,360 180,162 163,162 166,162 165,004 165,004 164,004 164,004 163,004 1,465,868

16. Summary
 Moving the Foundation from a “Linux Foundation” model to a “Mozilla” model
provides the best possible avenue for success for promotional and community
efforts and the technical development of Bitcoin Core
 DevCore and new conference partnership for Bitcoin 2015 provide viable
business model for the Foundation to remain a going concern and support
existing membership base
 Creating NewCo for engineering team opens up access to direct fundraising
both independently and through Foundation grants. Also, it resolves
uncertainty from the IRS treatment of the 501(c)6
 With such a short runway, restructuring activities would need to take place by
the end of March